Canadian Online Discount Stock Brokerage Comparison – 2016

by Mike Holman

Canadian Online Discount Stock Brokerage Comparison

This comparison is intended to show in one place, all the important information that someone who is looking for a discount brokerage would want to know – trading commissions, account fees etc. There are also links to more detailed individual brokerage reviews. Of course, all this information is available on broker websites, but as I’ve found out – it can be very difficult and time consuming to compile even basic information from a broker website.

Things to look for in a discount brokerage

Trading commissions – Don’t pay $29 for a trade when you could be paying a lot less. That’s just not a good deal.

Account fees – there are a lot of conditions for account fees, so study these carefully. Most of the time, investors with large balances can get the fees waived, but smaller investors should look for an account with no fees.

Learn to negotiate

I can’t emphasize enough that if you have a decent amount of assets, then try to negotiate fees. As to how much you need in assets to negotiate – try it and find out for yourself. Here are some suggested negotiation areas:

Trading commissions – Are you at a big bank and are not too far away from having enough money to qualify for $10 commission? Ask for them now. TD and Qtrade just joined Scotia by lowering their cheap trade threshold to $50,000. Ask your bank to do the same for you.

Currency exchange fees – Before doing a trade between currencies, it is worthwhile to call and see what kind of preferred rate might be available.

Transfer to new brokerage fees – If you are moving to a new brokerage, ask them to pay your transfer fees.

Account fees – If you are close to the threshold for no account fees, ask if they can be waived.

Recommendations

Overall best

Questrade is my favourite – They have every account type, you can have US$ in your RRSP account, 2nd lowest trading commissions (after IB). As a very passive investor, I wouldn’t consider using anybody else. Check out the full Questrade discount brokerage review which also offers a $50 free trades promotion code.

Lowest commissions

Interactive Brokers has the lowest commissions and exchange rate of all the brokers listed. The main drawbacks of IB are that they only have non-registered accounts available and there is a $10,000 account minimum.

Active traders

Investors who trade frequently get the best deals on commissions. Interactive Brokers has the best deal for non-registered accounts with a minimum of $10,000 ($3,000 minimum if you are 21 or younger).
The big banks have good deals for active traders at $6 to $7 per trade, which is only slightly more than Questrade.

Table layout

It would be nice to be able to put all the data onto a table for easy reference, but unfortunately nothing is that simple. There are so many conditional fees that I ended up putting some information on the table and also created a detail section for each brokerage below the table.

If you see an asterisk * in the field – click on the field and it will take you to the appropriate information below the table. Alternatively look for fields with links – and click on them for more information.

For example in the “Online Trade Commissions” column you will see the commission range of “$24.99 to $6*” in the field next to “Scotia iTrade”. If you click on that link, you will then be taken to the detailed trade commissions for Scotia iTrade where you can read how to qualify for the different trade commissions.

I’ve also linked to my reviews of each brokerage which will contain more in depth information. Click on the brokerage name to see the review. At this time, there are only a few completed, but I will be publishing more in the coming weeks.

Please do not copy and paste the information in the tables to other websites. You are welcome to link to this page.

Rob Carrick’s Globe & Mail comparison is what originally got me to move from RBC (because of their high prices at the time) to E*Trade (because of their low prices) and ultimately to Qtrade (low prices, great web site, great service). Gathering up all the information is time consuming so thanks a lot for doing all the leg work!

A couple things I would add about Qtrade are
1) e-mail support is great, I rarely ever call them; where as E*Trade had almost no e-mail support and frustrating phone support (that may have changed since they were bought out).
2) the web site is better than E*Trades and much better than RBC’s. RBC might have more information (since you get access to Globe Investor GOLD) but the presentation is so 1990’s its painful).

My biggest frustration with the web sites is they often use 3rd parties for their data; and often those 3rd parties have their own websites with MORE features than available from the broker’s site. For example, Qtrade uses BigCharts.com (actually MarketWatch.com) for their charts but doesn’t let you generate all the chart sizes available directly from BigCharts.com – and I like charts so being able to generate a chart that fills my whole monitor is awesome.

My other frustration is the lack of downloadable PDF statements – Qtrade offers downloadable transaction confirmations but they still mail me printed statements. They’re one of the only bits of actual mail I still get!!!

“Questrade – US$ RRSP – To sell a US$ security – you must set the account currency settlement option to US$. Do the trade(s) – an extra $5 commission per day will be charged. Ie you can do 5 trades and only $5 will be charged.”

This has changed as of May 2010…here’s the new policy:

“Reduced USD in RSP commission fees – If you currently hold U.S. cash and trade USD securities in your TFSA, RRSP, spousal RRSP, or LIRA, the $5.00 U.S. flat-per-day commission fee payable each day you trade USD securities no longer applies.

LIFs, RIFs, spousal RIFs, and RESPs cannot directly hold U.S. dollars. These accounts will continue to hold USD units with each unit equal to one U.S. dollar. A $5.00 U.S. flat-per-day commission is applied each day you trade USD securities no matter how many trades you make. If you make no USD trades on a particular day no commissions are charged. “

First of all, Thank you for the well organized information. my question is that I am not sure about TD lowering the cheap limits to $50,000. It is currently showing $100,000 as the limit on their website.

One thing that would be helpful would be more detail on forex fees. For instance, TDW seems to be a sliding scale, with smaller purchases at 1.35%-1.5%, but around 0.8% when over $25,000, and around 0.67% at $60,000. This is online with WebBroker – for amounts over $60,000, they seem to do better if you call in a get a quote. I got a quote that worked out at around 0.3% for a hypothetical $100,000. Calling in is a pain, so having the approximate levels and rates for the brokerages in one place would be interesting.

That is an excellent suggestion and I would be interested in doing some like that. However, the problem is that finding out any forex rates can be quite difficult. There were quite a few times where I got a customer service rep who just couldn’t answer the question and I had to phone back.

I did note on the chart, that you should phone for updated forex rates and that they are negotiable.

I’m just not sure if it’s possible to do a detailed/up-to-date forex listing given all the moving parts. I think the main benefit of my forex column is to see the relative amounts being charged compared to other brokers.

With TDW, you can get an automated online quote in WebBroker (their web platform). I just choose an amount, get the quote, go back and reverse the direction, get that quote, and the midpoint between the two rates should be the spot price, and the difference between a rate and the spot is the spread. Do this for various amounts and it isn’t too hard to work out their tiers, and the spreads are pretty consistent. You’d just need to find volunteers for the various other brokers that have an online exchange quote available – even knowing which ones quote currency purchases online would be a useful addition to the chart.

Mike – great job on compiling all this information, I commend you on the time it must have taken to put this together.

I use 3 different discount brokerages – BMO Investorline, ScotiaMcLeod, and CIBC Investors’ Edge. I tend to like the online interface of BMO Investorline a lot and ScotiaMcLeod is not far behind. I find the CIBC ok.

Based on the few transactions I did for currency exchange, I found my BMO Investorline account to have fairly good rates.

I have a question regarding holding US$ in an RRSP. You mention that Questrade has currency settlement options for all registered accounts, one of them being
” * Managed US$ – All cash is converted to US$ (i.e., any Cdn$ funds are automatically converted to US$).”

I’m just curious – if I want to hold U.S. equities within my RRSP, if I’m not mistaken, doesn’t the currency have to be in Cdn$? When you mention”Managed US$, this means that you can hold US$ currency only (and not stocks in US$) within your RRSP, is that correct?

“Managed US$” means that any cash in the account will be converted to US$, if it is not US$ already. This doesn’t apply to stocks – you can still own stocks of either currency in the account if you wish, regardless of the currency designation.

Ok, so if I’m reading it right, I can have U.S. stocks held within my RRSPs in US$?

I always thought that in Canada, all RRSP accounts, regardless of which institution you invest with, must settle in Cdn $ when it comes time to buying US equities. I also thought that when you begin withdrawing the funds the proceeds are sold in US$ and immediately converted back to Cdn $.

Do you know if Questrade is the only discount brokerage firm that allows for US equities to be held in US$ within an RRSP?

Mike – very informative unbiased piece which really helps out the do-it-yourself investor. On a more granular level, I would also caution DIY investors to review their commission charges periodically as I occasionally get charged more than the agreed $9.99. They haven’t been able to articulate why the system defaults to $29.00, but nonetheless I review all my charges.

Secondly, a friend, who can probably relate to many others, has multiple accounts with many banks or financial institutions. In her case it’s due to laziness, but I can’t emphasize enough the negative long-term consequences of this. For starters she could be leveraging her asset total for reduced discounts and waiver of fees rather than being spread to thinly only to be charged annual fees etc…

I received in dividend shares from a US company OTCBB Pink Sheet.When I tried to deposit the share certificate in my account they refuse telling me that they donnot acept Pinksheet shares in deposit du to to much fraud.

What can I do with my certificates I cannot trade them.I am in Canada.Do you know a broker that would take them if I open an account.

Mike said…” The bid/ask spread is determined by the market. The brokerage has nothing to do with it”…sorry mike ,but a broker is more then online inter face,this is why we have Alpha ,Omega…for large trades (1000 shares)…for the small trades(100 shares) like most of your readers ,the trades are cleared in the brokerage (back office). Because it takes volume ,some do this better then others (on the buy side CIBC ,on the sell side TDW) the funny thing is Advisers know this,an can save there client way more then $100 to make the trade for them.

DJ – fair enough. However, most of the differences in bid/ask that typical investors see has to do with how thinly traded/active the stock is which is determined by the market.

The bottom line is that different investors have to consider different factors when choosing discount brokerages. I’ve only included the main ones that most investors look for. I’m sure there are plenty of others factors that some investors will rank higher than the ones I’ve listed.

Thanks for this comprehensive list- it’s great. I’m a Questrade girl myself- TFSA, margin, RRSP, you name it! Their Questrade WEB format is okay, customer service isn’t the most timely or organized, but you get what you pay for and I like how I can keep my investing costs low. 🙂

how can you tell how big/small the foreign exchange spread is? e.g TDW only gives you the exchange rate with the spread built in at the time of the US$ securyties purchase or transfer, the don’t break it down (nobody does)..

Get the rate they will sell you US dollars at, and also get the rate they will buy them from you. The average (sum them and divide by 2) should be roughly the mid-market spot rate. If you subtract the spot from the sell rate, and divide the result by the spot rate, you should get their spread percentage.

I’ve done this with various amounts on TD’s WebBroker (MyAccounts/Transfers/Foreign Exchange) and the results are pretty consistent. There seems to be a set of tiers involved. Small values tend to start out at 1.57% and 15000 at 1.35%, but by $35000 it is down to 0.8% and by $65000 it hits 0.67% and gets no better. If you call them you can get what seems to be a 0.32% rate for $100K or more. Not an everyday thing, but I’m doing a huge one-time conversion to switch to some $US ETFs, so I’ve interested in this stuff right now.

The Globe and Mail did a forex chart for their recent brokerage comparison, but the results seem goofed up (http://ow.ly/38o6S). There’s no mention of the variable TDW pricing, either – they were trying to benchmark a $2500 equity trade.

I think I forgot to mention (my recent comment isn’t showing up yet) but the Knightsbridge forex folks said converting $25,000 would probably be 40-55 basis points, and $150,000 would be 20-30 points, perhaps a low as 10-15 for good customers.

Quick update on the Forex fee with Questrade in a non-registered account. If you’re converting $10,000 or more, you can ask that a note to be added to your FX request to reduce the rate from 125 to 75 pips.

That’s low enough to discourage me from attempting a Norbert’s Gambit or shuffling money through another forex company to save a few more pips.

Having said that, if I was fortunate enough to be in NorthernRaven’s position, I probably would go through Knightsbridge to save $400-$500 on a 100K transaction 😉

@Erick – my situation is a little unusual in that I sold my condo a few years ago (so the portfolio is bigger than it otherwise would be), and I’m doing a one-time partial switch from $C to $U investments. I certainly don’t deal in these sorts of sums normally, unfortunately!

30 points isn’t bad, and I keep trying to think of it as an unnoticeable part of these large-sum transactions. Unfortunately, I instead keep thinking of it as a $500 fee, and since my spare time is cheap it has been interesting looking into ways to reduce it. I’ll likely gambit (perhaps in two or three chunks), but I probably wouldn’t have inside an RRSP (that manual call to get TDW to journal things from one side to another).

NG to be effective requires quick action in all steps. This is no attainable, so the risk of the market going down and you ending up losing more money that the fees you would have paid durin the forex, are there; on the upside, if the value of the invesment goes up, you might even rack a profit. All the idea is to buy the shares, call inmediatly, journal them, and sell them right away. You got to have a lot of luck to do this in a brief time; with TDW it won’t happen. Also, you mjust pick a highly liquid stock trading in both sides of the border and a “calm” day (if there is such thing as “calm” day). I use the NG to do the forex but only when I am not in a rush, I buy a quality stock with an upside, and willing to wait a few days to sell when convenient.

@Mike and TL – that’s why I’d be willing to let TD do the exchange if the difference isn’t to great, or if I had to do it in an RRSP and deal with that journaling step. But the other version of NG involves first shorting the stock on the US side (which you can’t do in a TDW RRSP), and immediately purchasing it on the CDN side. In theory, you are exposed to the bid/ask spreads, the commission (2x$10), plus whatever execution delay the TDW systems normally have in buying equities. The last is what I’d want to find out more about, but you eliminate dealing with the length of time to manually journal things, in my understanding.

I’m not committing myself to doing this, just keeping my options open, and I’d break things up into two or three more reasonable lumps (an extra $20-40 in trading costs). And you certainly wouldn’t want to use POTash Corp as the trading stock right now!

@NorthernRaven: in that NG variant you must also account for 3 things:
1) journalling de newly purchase shares will take time (at least TDW will delay it until the purchase is settled)
2) the shorting implies loan interests from the broker, which also add to the cost of the transaction, since the return of the loaned shares might likely take a few days.
3) I haven’t done shorting yet, but buying on margin requires you to contribute 30% of the stocks purchase (i wonder if shorting might require you to have liquidity of such percentage in your US side)

@TL – because I’m liquidating stuff anyway, I’ll temporarily have a large amount in the TDW account, so I could meet the 130% requirement for any clearing period. My account isn’t yet margin-enabled, so I can’t check their interface, but I would think that if the margin account had cash for 130% of the short, there would be no loan involved. If there was, 3 days of 4.5% on 65000 (130% of a $50,000 short) comes to $16, and I believe the loan would be for the 30% value, not 100%, since you have the proceeds of the short sale at a nominal 100% in the margin account. Even if I don’t wind up doing any of this, the learning is fun in itself.

@NorthernRaven: maybe I am missing something, but, if you short in the US account, the proceedings you get there are a loan until you repay the shares you sold, by buying them with your CAD and journaling into the US account. That been said, all comes down to math, e.g. the interest on the load might be minuscule compared with the fees otherwise paid doing a forex.

Questrade is the only tool I use — the only other one I considered was through my bank, but the fees for trading were ridiculous. My only beef with Questrade and how its set up though, is that there usually is a 3 day lag between when I put money into my account, and when it actually appears. Other than that, its everything I need — fast, cheap, and efficient.

I actually TRACK my stocks using Google Finance though, as I find it much more intuitive and easier to watch. For Trades, I log into Questrade, make the request, and then update Google Finance.

Following Info Missing from DISNAT: BEST DEAL FOR ACTIVE
PENNY STCK TRADER: 1) Below $2.00 stocks you pay $5.00 upto 10,000
stock purchase.(Excellent Deal for Penny Stock Traders). For Active
Traders(BEST DEAL IN Canada for Active Penny Stcok Traders): 2)
TWO(2) Trading platforms: a) DDPLUS b) DDEXTRA ( BOTH NOT WEBBASED
but SOFTWARE MUST BE INSTALLED).-Top of the line. 3)Under DDEXTRA:
If you trade 31 times on previous month you get the Platform and
all data(inclTSX-V) included FREE. 4) Under DDPLUS :If you trade 41
times previous month you get the Platform and all data(Level II)
including TSAX-V included FREE. Over $2.00 stocks and over 10,000
stock purchase the maximum cost is $9.99 per trade. There is no
better deal if active below $2.00 stock trader, which I am. (From
Jan,2011 they are stopping OTC,BB and PINK SHEETS because of heavy
manupulation of price etc)-This is the deficiency now. Sam Baidya
Toronto

Hi Sam:
I know very little about trading stock. I wanted to invest in a stock for the TFSA which I have set up and I bought a US market penny stock thinking that it was eligible as it is publicly traded on the US stock exchange. I went to TD Bank and they told me I had to call a Trader to transfer my stock into the TFSA – I could not do this on line, which I had tried to do but was unable.
I got in touch with the Trader this morning and asked them to the transfer and she told me that the stock I have bought is not eligible as the TD Waterhouse decision is that it is too volatile a stock. I don’t understand what they are saying. Why do they have the right to tell me that I can’t put the stock that I have chosen into my TFSA. Is this something you can answer ? if not, could you tell me who will explain this to a novice?

I wish someone would explain ECN fees. It seems that many brokerages have them. I tested the Virtual Trading platform at OptionsXpress Canada and was just ready to move my account from TD Waterhouse ( I can’t stand micro-managing their washes) when I came across ECN fees in the contract. This isn’t mentioned on their website. It has something to do with trading at market price and adding / removing liquidity, sometimes you get dinged and sometimes you get credits but it’s not clear enough. Can a trade change from $9.95 to say, $15.00 just by buying “at market”?

The fellow at OptionsXpress said they are standard fees, but I don’t get them at TD. Are you able to clarify?

Seems the large bank brokerages do charge ECN. But I think it’s for professional traders and paid agents. I copied this from TD Waterhouse Active Trader web pages”

“U.S. Electronic Communication Network (ECN) Fees $0.003/ Share – Only applicable when an order is routed by you to an ECN for execution and deemed to remove liquidity. Good Till Extended Markets (GTEM) orders which remove liquidity are also subject to an ECN fee.”

Then farther down in the footnotes:

You will be charged an ECN fee when you direct trades to an ECN and when such trades are deemed to be “removing liquidity.” Removing liquidity is based on each ECN’s definition as provided on its website. Fees are subject to change on a minimum of 60 days notice to you.

* An employee of a member of any stock exchange or the Investment Industry Regulatory Organization of Canada (IIROC), or of any business registered under any securities law or regulation.
* An individual or entity trading in the account as a paid agent for a third party.
* An individual or entity whose account is in the name of a corporation, partnership or sole proprietorship.

*** If these fees only apply to professionals then I don’t have to worry about it.

I looked at the Questrade link and it looks as if you can avoid the fees if you route a trade through POST, MNGD and LAMP. I’m not even sure if you can pick.

From what I can gather, if you place an order at market price or for some strange reason at higher than market price, then you get dinged ECN Fees.
Opposite for selling: sell at market or lower than market.

Thanks for putting together the comprehensive list Mike! My only question is, have you ever had any problems with Questrades’s customer service? I personally never have, but I’ve seen various spots around the net where people had some pretty negative stories.